Introduction

“The
Final Act Embodying the Results of the Uruguay Round of Multilateral Trade
Negotiations”, signed by ministers in Marrakesh on 15 April 1994 is 550 pages long
and contains legal texts which spell out the results of the negotiations since the Round
was launched in Punta del Este, Uruguay, in September 1986. In addition to the texts of
the agreements, the Final Act also contains texts of Ministerial Decisions and
Declarations which further clarify certain provisions of some of the agreements.

The Final Act
covers all the negotiating areas cited in the Punta del Este Declaration with two
important exceptions. The first is the results of the “market access
negotiations” in which individual countries have made binding commitments to reduce
or eliminate specific tariffs and non-tariff barriers to merchandise trade. These
concessions are recorded in national schedules that form an integral part of the Final
Act. The second is the “initial commitments” on liberalization of trade in
services. These commitments on liberalization are also recorded in national schedules.

Agreement Establishing the
World Trade Organization

The agreement
establishing the World Trade Organization (WTO) calls for a single institutional framework
encompassing the GATT, as modified by the Uruguay Round, all agreements and arrangements
concluded under its auspices and the complete results of the Uruguay Round. Its structure
is headed by a Ministerial Conference meeting at least once every two years. A General
Council oversees the operation of the agreement and ministerial decisions on a regular
basis. This General Council acts as a Dispute Settlement Body and a Trade Policy Review
Mechanism, which concern themselves with the full range of trade issues covered by the
WTO, and has also established subsidiary bodies such as a Goods Council, a Services
Council and a TRIPs Council. The WTO framework ensures a “single undertaking
approach” to the results of the Uruguay Round — thus, membership in the WTO entails
accepting all the results of the Round without exception.

General Agreement on Tariffs
and Trade 1994

Texts on the
interpretation of the following GATT articles are included in the Final Act:

Article II
— Schedules of Concessions. Agreement to record in national schedules “other
duties or charges” levied in addition to the recorded tariff and to bind them at the
levels prevailing at the date established in the Uruguay Round Protocol.

Understanding
on the Interpretation of Article XVII — State-trading Enterprises. Agreement
increasing surveillance of their activities through stronger notification and review
procedures.

Understanding
on the Interpretation of Articles XII and XVIII:B

Balance-of-payments
provisions. Agreement that contracting parties imposing restrictions for
balance-of-payments purposes should do so in the least trade-disruptive manner and should
favour price-based measures, like import surcharges and import deposits, rather than
quantitative restrictions. Agreement also on procedures for consultations by the GATT
Balance-of-Payments Committee as well as for notification of BOP measures.

Understanding
on the Interpretation of Article XXIV — Customs Unions and Free-Trade Areas. Agreement
clarifying and reinforcing the criteria and procedures for the review of new or enlarged
customs unions or free-trade areas and for the evaluation of their effects on third
parties. The agreement also clarifies the procedure to be followed for achieving any
necessary compensatory adjustment in the event of contracting parties forming a customs
union seeking to increase a bound tariff. The obligations of contracting parties in regard
to measures taken by regional or local governments or authorities within their territories
are also clarified.

Understanding
on the Interpretation of Article XXV — Waivers. Agreement of new procedures for the
granting of waivers from GATT disciplines, to specify termination dates for any waivers to
be granted in the future, and to fix expiry dates for existing waivers. The main
provisions concerning the granting of waivers are, however, contained in the Agreement on
the WTO.

Understanding
on the Interpretation of Article XXVIII — Modification of GATT Schedules. Agreement on
new procedures for the negotiation of compensation when tariff bindings are modified or
withdrawn, including the creation of a new negotiating right for the country for which the
product in question accounts for the highest proportion of its exports. This is intended
to increase the ability of smaller and developing countries to participate in
negotiations.

Understanding
on the Interpretation of Article XXXV — Non-application of the General Agreement. Agreement
to allow a contracting party or a newly acceding country to invoke GATT’s non-application
provisions vis-Ó-vis the other party after having entered into tariff negotiations with
each other. The WTO Agreement foresees that any invocation of the non-application
provisions under that Agreement must extend to all the multilateral agreements.

Uruguay Round Protocol GATT
1994

The results
of the market access negotiations in which participants have made commitments to eliminate
or reduce tariff rates and non-tariff measures applicable to trade in goods are recorded
in national schedules of concessions annexed to the Uruguay Round Protocol that forms an
integral part of the Final Act.

The schedule
annexed to the Protocol relating to a Member shall become a Schedule to the GATT 1994
relating to that Member on the day on which the Agreement Establishing the WTO enters into
force for that Member.

For
non-agricultural products the tariff reduction agreed upon by each Member shall be
implemented in five equal rate reductions, except as may be otherwise specified in a
Member’s Schedule. The first such reduction shall be made effective on the date of entry
into force of the Agreement Establishing the WTO. Each successive reduction shall be made
effective on 1 January of each of the following years, and the final rate shall become
effective no later than the date four years after the date of entry into force of the
Agreement Establishing the WTO. However, participants may implement reduction in fewer
stages or at earlier dates than those indicated in the Protocol, if they so wish.

For
agricultural products, as defined in Article 2 of the Agreement on Agriculture, the
staging of reductions shall be implemented as specified in the relevant parts of the
schedules. Details are given in the section of this paper concerning the Agricultural
Agreement.

A related
Decision on Measures in Favour of Least-Developed Countries establishes, among other
things, that these countries will not be required to undertake any commitments and
concessions which are inconsistent with their individual development, financial and trade
needs. Alongside other more specific provisions for flexible and favourable treatment, it
also allows for the completion of their schedules of concessions and commitments in Market
Access and in Services by April 1995 rather than 15 December 1993.

Agreement on Agriculture

The
negotiations have resulted in four main portions of the Agreement; the Agreement on
Agriculture itself; the concessions and commitments Members are to undertake on market
access, domestic support and export subsidies; the Agreement on Sanitary and Phytosanitary
Measures; and the Ministerial Decision concerning Least-Developed and Net Food-Importing
Developing countries.

Overall, the
results of the negotiations provide a framework for the long-term reform of agricultural
trade and domestic policies over the years to come. It makes a decisive move towards the
objective of increased market orientation in agricultural trade. The rules governing
agricultural trade are strengthened which will lead to improved predictability and
stability for importing and exporting countries alike.

The
agricultural package also addresses many other issues of vital economic and political
importance to many Members. These include provisions that encourage the use of less
trade-distorting domestic support policies to maintain the rural economy, that allow
actions to be taken to ease any adjustment burden, and also the introduction of tightly
prescribed provisions that allow some flexibility in the implementation of commitments.
Specific concerns of developing countries have been addressed including the concerns of
net-food importing countries and least-developed countries.

The
agricultural package provides for commitments in the area of market access, domestic
support and export competition. The text of the Agricultural Agreement is mirrored in the
GATT Schedules of legal commitments relating to individual countries (see above).

In the area
of market access, non-tariff border measures are replaced by tariffs that provide
substantially the same level of protection. Tariffs resulting from this
“tariffication” process, as well as other tariffs on agricultural products, are
to be reduced by an average 36 per cent in the case of developed countries and 24 per cent
in the case of developing countries, with minimum reductions for each tariff line being
required. Reductions are to be undertaken over six years in the case of developed
countries and over ten years in the case of developing countries. Least-developed
countries are not required to reduce their tariffs.

The
tariffication package also provides for the maintenance of current access opportunities
and the establishment of minimum access tariff quotas (at reduced-tariff rates) where
current access is less than 3 per cent of domestic consumption. These minimum access
tariff quotas are to be expanded to 5 per cent over the implementation period. In the case
of “tariffied” products “special safeguard” provisions will allow
additional duties to be applied in case shipments at prices denominated in domestic
currencies below a certain reference level or in case of a surge of imports. The trigger
in the safeguard for import surges depends on the “import penetration” currently
existing in the market, i.e. where imports currently make up a large proportion of
consumption, the import surge required to trigger the special safeguard action is lower.

Domestic
support measures that have, at most, a minimal impact on trade (“green box”
policies) are excluded from reduction commitments. Such policies include general
government services, for example in the areas of research, disease control, infrastructure
and food security. It also includes direct payments to producers, for example certain
forms of “decoupled” (from production) income support, structural adjustment
assistance, direct payments under environmental programmes and under regional assistance
programmes.

In addition
to the green box policies, other policies need not be included in the Total Aggregate
Measurement of Support (Total AMS) reduction commitments. These policies are direct
payments under production-limiting programmes, certain government assistance measures to
encourage agricultural and rural development in developing countries and other support
which makes up only a low proportion (5 per cent in the case of developed countries and 10
per cent in the case of developing countries) of the value of production of individual
products or, in the case of non-product-specific support, the value of total agricultural
production.

The Total AMS
covers all support provided on either a product-specific or non-product-specific basis
that does not qualify for exemption and is to be reduced by 20 per cent (13.3 per cent for
developing countries with no reduction for least-developed countries) during the
implementation period.

Members are
required to reduce the value of mainly direct export subsidies to a level 36 per
cent below the 1986-90 base period level over the six-year implementation period, and the
quantity of subsidised exports by 21 per cent over the same period. In the case of
developing countries, the reductions are two-thirds those of developed countries over a
ten-year period (with no reductions applying to the least-developed countries) and subject
to certain conditions, there are no commitments on subsidies to reduce the costs of
marketing exports of agricultural products or internal transport and freight charges on
export shipments. Where subsidised exports have increased since the 1986-90 base period,
1991-92 may be used, in certain circumstances, as the beginning point of reductions
although the end-point remains that based on the 1986-90 base period level. The Agreement
on Agriculture provides for some limited flexibility between years in terms of export
subsidy reduction commitments and contains provisions aimed at preventing the
circumvention of the export subsidy commitments and sets out criteria for food aid
donations and the use of export credits.

“Peace”
provisions within the agreement include: an understanding that certain actions available
under the Subsidies Agreement will not be applied with respect to green box policies and
domestic support and export subsidies maintained in conformity with commitments; an
understanding that “due restraint” will be used in the application of
countervailing duty rights under the General Agreement; and setting out limits in terms of
the applicability of nullification or impairment actions. These peace provisions will
apply for a period of 9 years.

The agreement
sets up a committee that will monitor the implementation of commitments, and also monitor
the follow-up to the Decision on Measures Concerning the Possible Negative Effects of the
Reform Programme on Least-Developed and Net Food-Importing Developing Countries.

The package
is conceived as part of a continuing process with the long-term objective of securing
substantial progressive reductions in support and protection. In this light, it calls for
further negotiations in the fifth year of implementation which, along with an assessment
of the first five years, would take into account non-trade concerns, special and
differential treatment for developing countries, the objective to establish a fair and
market-oriented agricultural trading system and other concerns and objectives noted in the
preamble to the agreement.

Agreement on Sanitary and
Phytosanitary Measures

This
agreement concerns the application of sanitary and phytosanitary measures — in other words
food safety and animal and plant health regulations. The agreement recognises that
governments have the right to take sanitary and phytosanitary measures but that they
should be applied only to the extent necessary to protect human, animal or plant life or
health and should not arbitrarily or unjustifiably discriminate between Members where
identical or similar conditions prevail.

In order to
harmonize sanitary and phytosanitary measures on as wide a basis as possible, Members are
encouraged to base their measures on international standards, guidelines and
recommendations where they exist. However, Members may maintain or introduce measures
which result in higher standards if there is scientific justification or as a consequence
of consistent risk decisions based on an appropriate risk assessment. The Agreement spells
out procedures and criteria for the assessment of risk and the determination of
appropriate levels of sanitary or phytosanitary protection.

It is
expected that Members would accept the sanitary and phytosanitary measures of others as
equivalent if the exporting country demonstrates to the importing country that its
measures achieve the importing country’s appropriate level of health protection. The
agreement includes provisions on control, inspection and approval procedures.

Decision on Measures
Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and
Net Food-Importing Developing Countries

It is
recognized that during the reform programme least-developed and net food-i mporting
developing countries may experience negative effects with respect to supplies of food
impor ts on reasonable terms and conditions. Therefore, a special Decision sets out
objectives with regard to the provision of food aid, the provision of basic foodstuffs in
full grant form and aid for agricultural development. It also refers to the possibility of
assistance from the International Monetary Fund and the World Bank with respect to the
short-term financing of commercial food imports. The Committee of Agriculture, set up
under the Agreement on Agriculture, monitors the follow-up to the Decision.

Agreement on Textiles and
Clothing

The object of
this negotiation has been to secure the eventual integration of the textiles and clothing
sector — where much of the trade is currently subject to bilateral quotas negotiated under
the Multifibre Arrangement (MFA) — into the GATT on the basis of strengthened GATT rules
and disciplines.

Integration
of the sector into the GATT would take place as follows : first, on 1 January 1995; each
party would integrate into the GATT products from the specific list in the Agreement which
accounted for not less than 16 per cent of its total volume of imports in 1990.
Integration means that trade in these products will be governed by the general rules of
GATT.

At the
beginning of Phase 2, on 1 January 1998, products which accounted for not less than 17 per
cent of 1990 imports would be integrated. On 1 January 2002, products which accounted for
not less than 18 per cent of 1990 imports would be integrated. All remaining products
would be integrated at the end of the transition period on 1 January 2005. At each of the
first three stages, products should be chosen from each of the following categories: tops
and yarns, fabrics, made-up textile products, and clothing.

All MFA
restrictions in place on 31 December 1994 would be carried over into the new agreement and
maintained until such time as the restrictions are removed or the products integrated into
GATT. For products remaining under restraint, at whatever stage, the agreement lays down a
formula for increasing the existing growth rates. Thus, during Stage 1, and for each
restriction previously under MFA bilateral agreements in force for 1994, annual growth
should be not less than 16 per cent higher than the growth rate established for the
previous MFA restriction. For Stage 2 (1998 to 2001 inclusive), annual growth rates should
be 25 per cent higher than the Stage 1 rates. For Stage 3 (2002 to 2004 inclusive), annual
growth rates should be 27 per cent higher than the Stage 2 rates.

While the
agreement focuses largely on the phasing-out of MFA restrictions, it also recognizes that
some members maintain non-MFA restrictions not justified under a GATT provision. These
would also be brought into conformity with GATT within one year of the entry into force of
the Agreement or phased out progressively during a period not exceeding the duration of
the Agreement (that is, by 2005).

It also
contains a specific transitional safeguard mechanism which could be applied to products
not yet integrated into the GATT at any stage. Action under the safeguard mechanism could
be taken against individual exporting countries if it were demonstrated by the importing
country that overall imports of a product were entering the country in such increased
quantities as to cause serious damage — or to threaten it — to the relevant domestic
industry, and that there was a sharp and substantial increase of imports from the
individual country concerned. Action under the safeguard mechanism could be taken either
by mutual agreement, following consultations, or unilaterally but subject to review by the
Textiles Monitoring Body. If taken, the level of restraints should be fixed at a level not
lower than the actual level of exports or imports from the country concerned during the
twelve-month period ending two months before the month in which a request for consultation
was made. Safeguard restraints could remain in place for up to three years without
extension or until the product is removed from the scope of the agreement (that is,
integrated into the GATT), whichever comes first.

The agreement
includes provisions to cope with possible circumvention of commitments through
transshipment, re-routing, false declaration concerning country or place of origin and
falsification of official documents.

The agreement
also stipulates that, as part of the integration process, all members shall take such
actions in the area of textiles and clothing as may be necessary to abide by GATT rules
and disciplines so as to improve market access, ensure the application of policies
relating to fair and equitable trading conditions, and avoid discrimination against
imports when taking measures for general trade policy reasons.

In the
context of a major review of the operation of the agreement to be conducted by the Council
for Trade in Goods before the end of each stage of the integration process, the Council
for Trade in Goods shall by consensus take such decisions as it deems appropriate to
ensure that the balance of rights and obligations in this agreement is not upset.
Moreover, the Dispute Settlement Body may authorise adjustments to the annual growth of
quotas for the stage subsequent to the review with respect to Members it has found not to
be complying with their obligations under this agreement.

A Textiles
Monitoring Body (TMB) oversees the implementation of commitments and to prepare reports
for the major reviews mentioned above. The agreement also has provisions for special
treatment to certain categories of countries — for example, those which have not been MFA
members since 1986, new entrants, small suppliers, and least-developed countries.

Agreement on Technical
Barriers to Trade

This agreement will extend and
clarify the Agreement on Technical Barriers to Trade reached in the Tokyo Round. It seeks
to ensure that technical negotiations and standards, as well as testing and certification
procedures, do not create unnecessary obstacles to trade. However, it recognizes that
countries have the right to establish protection, at levels they consider appropriate, for
example for human, animal or plant life or health or the environment, and should not be
prevented from taking measures necessary to ensure those levels of protection are met. The
agreement therefore encourages countries to use international standards where these are
appropriate, but it does not require them to change their levels of protection as a result
of standardization.

Innovative features of the
revised agreement are that it covers processing and production methods related to the
characteristics of the product itself. The coverage of conformity assessment procedures is
enlarged and the disciplines made more precise. Notification provisions applying to local
government and non-governmental bodies are elaborated in more detail than in the Tokyo
Round agreement. A Code of Good Practice for the Preparation, Adoption and Application of
Standards by standardizing bodies, which is open to acceptance by private sector bodies as
well as the public sector, is included as an annex to the agreement.

Agreement on Trade Related
Aspects of Investment Measures

The agreement
recognizes that certain investment measures restrict and distort trade. It provides that
no contracting party shall apply any TRIM inconsistent with Articles III (national
treatment) and XI (prohibition of quantitative restrictions) of the GATT. To this end, an
illustrative list of TRIMs agreed to be inconsistent with these articles is appended to
the agreement. The list includes measures which require particular levels of local
procurement by an enterprise (“local content requirements”) or which restrict
the volume or value of imports such an enterprise can purchase or use to an amount related
to the level of products it exports (“trade balancing requirements”).

The agreement
requires mandatory notification of all non-conforming TRIMs and their elimination within
two years for developed countries, within five years for developing countries and within
seven years for least-developed countries. It establishes a Committee on TRIMs which will,
among other things, monitor the implementation of these commitments. The agreement also
provides for consideration, at a later date, of whether it should be complemented with
provisions on investment and competition policy more broadly.

Agreement on Implementation
of Article VI (Anti-dumping)

Article VI of
the GATT provides for the right of contracting parties to apply anti-dumping measures,
i.e. measures against imports of a product at an export price below its “normal
value” (usually the price of the product in the domestic market of the exporting
country) if such dumped imports cause injury to a domestic industry in the territory of
the importing contracting party. More detailed rules governing the application of such
measures are currently provided in an Anti-dumping Agreement concluded at the end of the
Tokyo Round. Negotiations in the Uruguay Round have resulted in a revision of this
Agreement which addresses many areas in which the current Agreement lacks precision and
detail.

In
particular, the revised Agreement provides for greater clarity and more detailed rules in
relation to the method of determining that a product is dumped, the criteria to be taken
into account in a determination that dumped imports cause injury to a domestic industry,
the procedures to be followed in initiating and conducting anti-dumping investigations,
and the implementation and duration of anti-dumping measures. In addition, the new
agreement clarifies the role of dispute settlement panels in disputes relating to
anti-dumping actions taken by domestic authorities.

On the
methodology for determining that a product is exported at a dumped price, the new
Agreement adds relatively specific provisions on such issues as criteria for allocating
costs when the export price is compared with a “constructed” normal value and
rules to ensure that a fair comparison is made between the export price and the normal
value of a product so as not to arbitrarily create or inflate margins of dumping.

The agreement
strengthens the requirement for the importing country to establish a clear causal
relationship between dumped imports and injury to the domestic industry. The examination
of the dumped imports on the industry concerned must include an evaluation of all relevant
economic factors bearing on the state of the industry concerned. The agreement confirms
the existing interpretation of the term “domestic industry”. Subject to a few
exceptions, “domestic industry” refers to the domestic producers as a whole of
the like products or to those of them whose collective output of the products constitutes
a major proportion of the total domestic production of those products.

Clear-cut
procedures have been established on how anti-dumping cases are to be initiated and how
such investigations are to be conducted. Conditions for ensuring that all interested
parties are given an opportunity to present evidence are set out. Provisions on the
application of provisional measures, the use of price undertakings in anti-dumping cases,
and on the duration of anti-dumping measures have been strengthened. Thus, a significant
improvement over the existing Agreement consists of the addition of a new provision under
which anti-dumping measures shall expire five years after the date of imposition, unless a
determination is made that, in the event of termination of the measures, dumping and
injury would be likely to continue or recur.

A new
provision requires the immediate termination of an anti-dumping investigation in cases
where the authorities determine that the margin of dumping is de minimis (which is
defined as less than 2 per cent, expressed as a percentage of the export price of the
product) or that the volume of dumped imports is negligible (generally when the volume of
dumped imports from an individual country accounts for less than 3 per cent of the imports
of the product in question into the importing country).

The agreement
calls for prompt and detailed notification of all preliminary or final anti-dumping
actions to a Committee on Anti-dumping Practices. The agreement will afford parties the
opportunity of consulting on any matter relating to the operation of the agreement or the
furtherance of its objectives, and to request the establishment of panels to examine
disputes.

Agreement on Implementation
of Article VII (Customs Valuation)

The Decision
on Customs Valuation would give customs administrations the right to request further
information of importers where they have reason to doubt the accuracy of the declared
value of imported goods. If the administration maintains a reasonable doubt, despite any
additional information, it may be deemed that the customs value of the imported goods
cannot be determined on the basis of the declared value, and customs would need to
establish the value taking into account the provisions of the Agreement. In addition, two
accompanying texts further clarify certain of the Agreement’s provisions relevant to
developing countries and relating to minimum values and importations by sole agents, sole
distributors and sole concessionaires.

Agreement on Preshipment
Inspection

Preshipment
inspection (PSI) is the practice of employing specialized private companies to check
shipment details — essentially price, quantity, quality — of goods ordered overseas. Used
by governments of developing countries, the purpose is to safeguard national financial
interests (prevention of capital flight and commercial fraud as well as customs duty
evasion, for instance) and to compensate for inadequacies in administrative
infrastructures.

The agreement
recognizes that GATT principles and obligations apply to the activities of preshipment
inspection agencies mandated by governments. The obligations placed on PSI-user
governments include non-discrimination, transparency, protection of confidential business
information, avoidance of unreasonable delay, the use of specific guidelines for
conducting price verification and the avoidance of conflicts of interest by the PSI
agencies.

The
obligations of exporting contracting parties towards PSI users include non-discrimination
in the application of domestic laws and regulations, prompt publication of such laws and
regulations and the provision of technical assistance where requested.

The agreement
establishes an independent review procedure — administered jointly by an organization
representing PSI agencies and an organization representing exporters — to resolve disputes
between an exporter and a PSI agency.

Agreement on Rules of Origin

The agreement
aims at long-term harmonization of rules of origin, other than rules of origin relating to
the granting of tariff preferences, and to ensure that such rules do not themselves create
unnecessary obstacles to trade.

The agreement
sets up a harmonization programme, to be initiated as soon as possible after the
completion of the Uruguay Round and to be completed within three years of initiation. It
would be based upon a set of principles, including making rules of origin objective,
understandable and predictable. The work would be conducted by a Committee on Rules of
Origin (CRO) in the WTO and a technical committee (TCRO) under the auspices of the Customs Cooperation
Council in Brussels.

Much
work was done in the CRO and the TCRO and substantial progress has been
achieved in the three years foreseen in the Agreement for the completion of
the work. However, due to the complexity of the issues the HWP could not be
finalized within the foreseen deadline. The CRO continued its work in 2000.
In December 2000, the General Council Special Session agreed to set, as the
new deadline for completion of the remainder of the work, the Fourth Session
of the Ministerial Conference, or at the latest the end of 2001. The
negotiating texts are contained in documents G/RO/41 and G/RO/45.

Until the
completion of the harmonization programme, contracting parties would be expected to ensure
that their rules of origin are transparent; that they do not have restricting, distorting
or disruptive effects on international trade; that they are administered in a consistent,
uniform, impartial and reasonable manner, and that they are based on a positive standard
(in other words, they should state what does confer origin rather than what does not).

An annex to
the agreement sets out a “common declaration” with respect to the operation of
rules of origin on goods which qualify for preferential treatment.

Agreement on Import
Licensing Procedures

The revised
agreement strengthens the disciplines on the users of import licensing systems — which, in
any event, are much less widely used now than in the past — and increases transparency and
predictability. For example, the agreement requires parties to publish sufficient
information for traders to know the basis on which licences are granted. It contains
strengthened rules for the notification of the institution of import licensing procedures
or changes therein. It also offers guidance on the assessment of applications.

With respect
to automatic licensing procedures, the revised agreement sets out criteria under which
they are assumed not to have trade restrictive effects. With respect to non-automatic
licensing procedures, their administrative burden for importers and exporters should be
limited to what is absolutely necessary to administer the measures to which they apply.
The revised agreement also sets a maximum of 60 days for applications to be considered.

Agreement on Subsidies and
Countervailing Measures

The Agreement
on Subsidies and Countervailing Measures is intended to build on the Agreement on
Interpretation and Application of Articles VI, XVI and XXIII which was negotiated in the
Tokyo Round.

Unlike its
predecessor, the agreement contains a definition of subsidy and introduces the concept of
a “specific” subsidy — for the most part, a subsidy available only to an
enterprise or industry or group of enterprises or industries within the jurisdiction of
the authority granting the subsidy. Only specific subsidies would be subject to the
disciplines set out in the agreement.

The agreement
establishes three categories of subsidies. First, it deems the following subsidies to be
“prohibited”: those contingent, in law or in fact, whether solely or as one of
several other conditions, upon export performance; and those contingent, whether solely or
as one of several other conditions, upon the use of domestic over imported goods.
Prohibited subsidies are subject to new dispute settlement procedures. The main features
include an expedited timetable for action by the Dispute Settlement body, and if it is
found that the subsidy is indeed prohibited, it must be immediately withdrawn. If this is
not done within the specified time period, the complaining member is authorized to take
countermeasures. (See the section on “Dispute Settlement” for details on the
procedures).

The second
category is “actionable” subsidies. The agreement stipulates that no member
should cause, through the use of subsidies, adverse effects to the interests of other
signatories, i.e. injury to domestic industry of another signatory, nullification or
impairment of benefits accruing directly or indirectly to other signatories under the
General Agreement (in particular the benefits of bound tariff concessions), and serious
prejudice to the interests of another member. “Serious prejudice” shall be
presumed to exist for certain subsidies including when the total ad valorem
subsidization of a product exceeds 5 per cent. In such a situation, the burden of proof is
on the subsidizing member to show that the subsidies in question do not cause serious
prejudice to the complaining member. Members affected by actionable subsidies may refer
the matter to the Dispute Settlement body. In the event that it is determined that such
adverse effects exist, the subsidizing member must withdraw the subsidy or remove the
adverse effects.

The third
category involves non-actionable subsidies, which could either be non-specific subsidies,
or specific subsidies involving assistance to industrial research and pre-competitive
development activity, assistance to disadvantaged regions, or certain type of assistance
for adapting existing facilities to new environmental requirements imposed by law and/or
regulations. Where another member believes that an otherwise non-actionable subsidy is
resulting in serious adverse effects to a domestic industry, it may seek a determination
and recommendation on the matter.

One part of
the agreement concerns the use of countervailing measures on subsidized imported goods. It
sets out disciplines on the initiation of countervailing cases, investigations by national
authorities and rules of evidence to ensure that all interested parties can present
information and argument. Certain disciplines on the calculation of the amount of a
subsidy are outlined as is the basis for the determination of injury to the domestic
industry. The agreement would require that all relevant economic factors be taken into
account in assessing the state of the industry and that a causal link be established
between the subsidized imports and the alleged injury. Countervailing investigations shall
be terminated immediately in cases where the amount of a subsidy is de minimis (the
subsidy is less than 1 per cent advalorem) or where the volume of
subsidized imports, actual or potential, or the injury is negligible. Except under
exceptional circumstances, investigations shall be concluded within one year after their
initiation and in no case more than 18 months. All countervailing duties have to be
terminated within 5 years of their imposition unless the authorities determine on the
basis of a review that the expiry of the duty would be likely to lead to continuation or
recurrence of subsidization and injury.

The agreement
recognizes that subsidies may play an important role in economic development programmes of
developing countries, and in the transformation of centrally-planned economies to market
economies. Least-developed countries and developing countries that have less than $1,000
per capita GNP are thus exempted from disciplines on prohibited export subsidies, and have
a time-bound exemption from other prohibited subsidies. For other developing countries,
the export subsidy prohibition would take effect 8 years after the entry into force of the
agreement establishing the WTO, and they have a time-bound (though fewer years than for
poorer developing countries) exemption from the other prohibited subsidies. Countervailing
investigation of a product originating from a developing-country member would be
terminated if the overall level of subsidies does not exceed 2 per cent (and from certain
developing countries 3 per cent) of the value of the product, or if the volume of the
subsidized imports represents less than 4 per cent of the total imports for the like
product in the importing signatory. For countries in the process of transformation from a
centrally-planned into a market economy, prohibited subsidies shall be phased out within a
period of seven years from the date of entry into force of the agreement.

In
anticipation of the negotiation of special rules in the civil aircraft sector,
under the subsidies agreement, civil aircraft products are not subject to the presumption
that ad valorem subsidization in excess of 5 per cent causes serious prejudice to
the interests of other Members. In addition, the Agreement provides that where repayment
of financing in the civil aircraft sector is dependent on the level of sales of a product
and sales fall below expectations, this does not in itself give rise to such presumption
of serious prejudice.

Agreement on Safeguards

Article XIX
of the General Agreement allows a GATT member to take a “safeguard” action to
protect a specific domestic industry from an unforeseen increase of imports of any product
which is causing, or which is likely to cause, serious injury to the industry.

The agreement
breaks major ground in establishing a prohibition against so-called “grey area”
measures, and in setting a “sunset clause” on all safeguard actions. The
agreement stipulates that a member shall not seek, take or maintain any voluntary export
restraints, orderly marketing arrangements or any other similar measures on the export or
the import side. Any such measure in effect at the time of entry into force of the
agreement would be brought into conformity with this agreement, or would have to be phased
out within four years after the entry into force of the agreement establishing the WTO. An
exception could be made for one specific measure for each importing member, subject to
mutual agreement with the directly concerned member, where the phase-out date would be 31
December 1999.

All existing
safeguard measures taken under Article XIX of the General Agreement 1947 shall be
terminated not later than eight years after the date on which they were first applied or
five years after the date of entry into force of the agreement establishing the WTO,
whichever comes later.

The agreement
sets out requirements for safeguard investigation which include public notice for hearings
and other appropriate means for interested parties to present evidence, including on
whether a measure would be in the public interest. In the event of critical circumstances,
a provisional safeguard measure may be imposed based upon a preliminary determination of
serious injury. The duration of such a provisional measure would not exceed 200 days.

The agreement
sets out the criteria for “serious injury” and the factors which must be
considered in determining the impact of imports. The safeguard measure should be applied
only to the extent necessary to prevent or remedy serious injury and to facilitate
adjustment. Where quantitative restrictions are imposed, they normally should not reduce
the quantities of imports below the annual average for the last three representative years
for which statistics are available, unless clear justification is given that a different
level is necessary to prevent or remedy serious injury.

In principle,
safeguard measures have to be applied irrespective of source. In cases in which a quota is
allocated among supplying countries, the member applying restrictions may seek agreement
with others. Members having a substantial interest in supplying the product concerned.
Normally, allocation of shares would be on the basis of proportion of total quantity or
value of the imported product over a previous representative period. However, it would be
possible for the importing country to depart from this approach if it could demonstrate,
in consultations under the auspices of the Safeguards Committee, that imports from certain
contracting parties had increased disproportionately in relation to the total increase and
that such a departure would be justified and equitable to all suppliers. The duration of
the safeguard measure in this case cannot exceed four years.

The agreement
lays down time limits for all safeguard measures. Generally, the duration of a measure
should not exceed four years though this could be extended up to a maximum of eight years,
subject to confirmation of continued necessity by the competent national authorities and
if there is evidence that the industry is adjusting. Any measure imposed for a period
greater than one year should be progressively liberalized during its lifetime. No
safeguard measure could be applied again to a product that had been subject to such action
for a period equal to the duration of the previous measure, subject to a non-application
period of at least two years. A safeguard measure with a duration of 180 days or less may
be applied again to the import of a product if at least one year had elapsed since the
date of introduction of the measure on that product, and if such a measure had not been
applied on the same product more than twice in the five-year period immediately preceding
the date of introduction of the measure.

The agreement
envisages consultations on compensation for safeguard measures. Where consultations are
not successful, the affected members may withdraw equivalent concessions or other
obligations under GATT 1994. However, such action is not allowed for the first three years
of the safeguard measure if it conforms to the provisions of the agreement, and is taken
as a result of an absolute increase in imports.

Safeguard
measures would not be applicable to a product from a developing country member, if the
share of the developing country member in the imports of the product concerned does not
exceed 3 per cent, and that developing country members with less than 3 per cent import
share collectively account for no more than 9 per cent of total imports of the product
concerned. A developing country member has the right to extend the period of application
of a safeguard measure for a period of up to two years beyond the normal maximum. It can
also apply a safeguard measure again to a product that had been subject to such an action
after a period equal to half of the duration of the previous measure, subject to a
non-application period of at least two years.

The agreement
would establish a Safeguards Committee which would oversee the operation of its provisions
and, in particular, be responsible for surveillance of its commitments.

General Agreement on Trade
in Services

The Services
Agreement which forms part of the Final Act rests on three pillars. The first is a
Framework Agreement containing basic obligations which apply to all member countries. The
second concerns national schedules of commitments containing specific further national
commitments which will be the subject of a continuing process of liberalization. The third
is a number of annexes addressing the special situations of individual services sectors.

Part I of the
basic agreement defines its scope — specifically, services supplied from the territory of
one party to the territory of another; services supplied in the territory of one party to
the consumers of any other (for example, tourism); services provided through the presence
of service providing entities of one party in the territory of any other (for example,
banking); and services provided by nationals of one party in the territory of any other
(for example, construction projects or consultancies).

Part II sets
out general obligations and disciplines. A basic most-favoured-nation (m.f.n.) obligation
states that each party “shall accord immediately and unconditionally to services and
service providers of any other Party, treatment no less favourable than that it accords to
like services and service providers of any other country”. However, it is recognized
that m.f.n. treatment may not be possible for every service activity and, therefore, it is
envisaged that parties may indicate specific m.f.n. exemptions. Conditions for such
exemptions are included as an annex and provide for reviews after five years and a normal
limitation of 10 years on their duration.

Transparency
requirements include publication of all relevant laws and regulations. Provisions to
facilitate the increased participation of developing countries in world services trade
envisage negotiated commitments on access to technology, improvements in access to
distribution channels and information networks and the liberalization of market access in
sectors and modes of supply of export interest. The provisions covering economic
integration are analogous to those in Article XXIV of GATT, requiring arrangements to have
“substantial sectoral coverage” and to “provide for the absence or
elimination of substantially all discrimination” between the parties.

Since
domestic regulations, not border measures, provide the most significant influence on
services trade, provisions spell out that all such measures of general application should
be administered in a reasonable, objective and impartial manner. There would be a
requirement that parties establish the means for prompt reviews of administrative
decisions relating to the supply of services.

The agreement
contains obligations with respect to recognition requirements (educational background, for
instance) for the purpose of securing authorizations, licenses or certification in the
services area. It encourages recognition requirements achieved through harmonization and
internationally-agreed criteria. Further provisions state that parties are required to
ensure that monopolies and exclusive service providers do not abuse their positions.
Restrictive business practices should be subject to consultations between parties with a
view to their elimination.

While parties
are normally obliged not to restrict international transfers and payments for current
transactions relating to commitments under the agreement, there are provisions allowing
limited restrictions in the event of balance-of-payments difficulties. However, where such
restrictions are imposed they would be subject to conditions; including that they are
non-discriminatory, that they avoid unnecessary commercial damage to other parties and
that they are of a temporary nature.

The agreement
contains both general exceptions and security exceptions provisions which are similar to
Articles XX and XXI of the GATT. It also envisages negotiations with a view to the
development of disciplines on trade-distorting subsidies in the services area.

Part III
contains provisions on market access and national treatment which would not be general
obligations but would be commitments made in national schedules. Thus, in the case of
market access, each party “shall accord services and service providers of other
Parties treatment no less favourable than that provided for under the terms, limitations
and conditions agreed and specified in its schedule”. The intention of the
market-access provision is to progressively eliminate the following types of measures:
limitations on numbers of service providers, on the total value of service transactions or
on the total number of service operations or people employed. Equally, restrictions on the
kind of legal entity or joint venture through which a service is provided or any foreign
capital limitations relating to maximum levels of foreign participation are to be
progressively eliminated.

The
national-treatment provision contains the obligation to treat foreign service suppliers
and domestic service suppliers in the same manner. However, it does provide the
possibility of different treatment being accorded the service providers of other parties
to that accorded to domestic service providers. However, in such cases the conditions of
competition should not, as a result, be modified in favour of the domestic service
providers.

Part IV of
the agreement establishes the basis for progressive liberalization in the services area
through successive rounds of negotiations and the development of national schedules. It
also permits, after a period of three years, parties to withdraw or modify commitments
made in their schedules. Where commitments are modified or withdrawn, negotiations should
be undertaken with interested parties to agree on compensatory adjustments. Where
agreement cannot be reached, compensation would be decided by arbitration.

Part V of the
agreement contains institutional provisions, including consultation and dispute settlement
and the establishment of a Council on Services. The responsibilities of the Council are
set out in a Ministerial Decision.

The first of
the annexes to the agreement concerns the movement of labour. It permits parties to
negotiate specific commitments applying to the movement of people providing services under
the agreement. It requires that people covered by a specific commitment shall be allowed
to provide the service in accordance with the terms of the commitment. Nevertheless, the
agreement would not apply to measures affecting employment, citizenship, residence or
employment on a permanent basis. The annex on financial services (largely banking and
insurance) lays down the right of parties, notwithstanding other provisions, to take
prudential measures, including for the protection of investors, deposit holders and policy
holders, and to ensure the integrity and stability of the financial system. However, a
further understanding on financial services would allow those participants who choose to
do so to undertake commitments on financial services through a different method. With
respect to market access, the understanding contains more detailed obligations on, among
other things, monopoly rights, cross-border trade (certain insurance and reinsurance
policy writing as well as financial data processing and transfer), the right to establish
or expand a commercial presence, and the temporary entry of personnel. The provisions on
national treatment refer explicitly to access to payments and clearing systems operated by
public entities and to official funding and refinancing facilities. They also relate to
membership of, or participation in, self-regulatory bodies, securities or futures
exchanges and clearing agencies.

The annex on
telecommunications relates to measures which affect access to and use of public
telecommunications services and networks. In particular, it requires that such access be
accorded to another party, on reasonable and non-discriminatory terms, to permit the
supply of a service included in its schedule. Conditions attached to the use of public
networks should be no more than is necessary to safeguard the public service
responsibilities of their operators, to protect the technical integrity of the network and
to ensure that foreign service suppliers do not supply services unless permitted to do so
through a specific commitment. The annex also encourages technical cooperation to assist
developing countries in the strengthening of their own domestic telecommunications
sectors. The annex on air-transport services excludes from the agreement’s coverage
traffic rights (largely bilateral air-service agreements conferring landing rights) and
directly related activities which might affect the negotiation of traffic rights.
Nevertheless, the annex, in its current form, also states that the agreement should apply
to aircraft repair and maintenance services, the marketing of air-transport services and
computer-reservation services. The operation of the annex would be reviewed at least every
five years.

In the final
days of the services negotiations, three Decisions were taken — on Financial Services,
Professional Services and the Movement of Natural Persons. The Decision on Financial
Services confirmed that commitments in this sector would be implemented on an MFN basis,
and permits Members to revise and finalize their schedules of commitments and their MFN
exemptions six months after the entry into force of the Agreement. Contrary to some media
reports, the audio-visual and maritime sectors have not been removed from the scope of the
GATS.

The agreement
recognises that widely varying standards in the protection and enforcement of intellectual
property rights and the lack of a multilateral framework of principles, rules and
disciplines dealing with international trade in counterfeit goods have been a growing
source of tension in international economic relations. Rules and disciplines were needed
to cope with these tensions. To that end, the agreement addresses the applicability of
basic GATT principles and those of relevant international intellectual property
agreements; the provision of adequate intellectual property rights; the provision of
effective enforcement measures for those rights; multilateral dispute settlement; and
transitional arrangements.

Part I of the
agreement sets out general provisions and basic principles, notably a national-treatment
commitment under which the nationals of other parties must be given treatment no less
favourable than that accorded to a party’s own nationals with regard to the protection of
intellectual property. It also contains a most-favoured-nation clause, a novelty in an
international intellectual property agreement, under which any advantage a party gives to
the nationals of another country must be extended immediately and unconditionally to the
nationals of all other parties, even if such treatment is more favourable than that which
it gives to its own nationals.

Part II
addresses each intellectual property right in succession. With respect to copyright,
parties are required to comply with the substantive provisions of the Berne Convention for
the protection of literary and artistic works, in its latest version (Paris 1971), though
they will not be obliged to protect moral rights as stipulated in Article 6bis of that
Convention. It ensures that computer programs will be protected as literary works under
the Berne Convention and lays down on what basis data bases should be protected by
copyright. Important additions to existing international rules in the area of copyright
and related rights are the provisions on rental rights. The draft requires authors of
computer programmes and producers of sound recordings to be given the right to authorize
or prohibit the commercial rental of their works to the public. A similar exclusive right
applies to films where commercial rental has led to widespread copying which is materially
impairing the right of reproduction. The draft also requires performers to be given
protection from unauthorized recording and broadcast of live performances (bootlegging).
The protection for performers and producers of sound recordings would be for no less than
50 years. Broadcasting organizations would have control over the use that can be made of
broadcast signals without their authorization. This right would last for at least 20
years.

With respect
to trademarks and service marks, the agreement defines what types of signs must be
eligible for protection as a trademark or service mark and what the minimum rights
conferred on their owners must be. Marks that have become well-known in a particular
country shall enjoy additional protection. In addition, the agreement lays down a number
of obligations with regard to the use of trademarks and service marks, their term of
protection, and their licensing or assignment. For example, requirements that foreign
marks be used in conjunction with local marks would, as a general rule, be prohibited.

In respect of
geographical indications, the agreement lays down that all parties must provide means to
prevent the use of any indication which misleads the consumer as to the origin of goods,
and any use which would constitute an act of unfair competition. A higher level of
protection is provided for geographical indications for wines and spirits, which are
protected even where there is no danger of the public’s being misled as to the true
origin. Exceptions are allowed for names that have already become generic terms, but any
country using such an exception must be willing to negotiate with a view to protecting the
geographical indications in question. Furthermore, provision is made for further
negotiations to establish a multilateral system of notification and registration of
geographical indications for wines.

Industrial
designs are also protected under the agreement for a period of 10 years. Owners of
protected designs would be able to prevent the manufacture, sale or importation of
articles bearing or embodying a design which is a copy of the protected design.

As regards
patents, there is a general obligation to comply with the substantive provisions of the
Paris Convention (1967). In addition, the agreement requires that 20-year patent
protection be available for all inventions, whether of products or processes, in almost
all fields of technology. Inventions may be excluded from patentability if their
commercial exploitation is prohibited for reasons of public order or morality; otherwise,
the permitted exclusions are for diagnostic, therapeutic and surgical methods, and for
plants and (other than microorganisms) animals and essentially biological processes for
the production of plants or animals (other than microbiological processes). Plant
varieties, however, must be protectable either by patents or by a sui generis
system (such as the breeder’s rights provided in a UPOV Convention). Detailed conditions
are laid down for compulsory licensing or governmental use of patents without the
authorization of the patent owner. Rights conferred in respect of patents for processes
must extend to the products directly obtained by the process; under certain conditions
alleged infringers may be ordered by a court to prove that they have not used the patented
process.

With respect
to the protection of layout designs of integrated circuits, the agreement requires parties
to provide protection on the basis of the Washington Treaty on Intellectual Property in
Respect of Integrated Circuits which was opened for signature in May 1989, but with a
number of additions: protection must be available for a minimum period of 10 years; the
rights must extend to articles incorporating infringing layout designs; innocent
infringers must be allowed to use or sell stock in hand or ordered before learning of the
infringement against a suitable royalty: and compulsory licensing and government use is
only allowed under a number of strict conditions.

Trade secrets
and know-how which have commercial value must be protected against breach of confidence
and other acts contrary to honest commercial practices. Test data submitted to governments
in order to obtain marketing approval for pharmaceutical or agricultural chemicals must
also be protected against unfair commercial use.

The final
section in this part of the agreement concerns anti-competitive practices in contractual
licences. It provides for consultations between governments where there is reason to
believe that licensing practices or conditions pertaining to intellectual property rights
constitute an abuse of these rights and have an adverse effect on competition. Remedies
against such abuses must be consistent with the other provisions of the agreement.

Part III of
the agreement sets out the obligations of member governments to provide procedures and
remedies under their domestic law to ensure that intellectual property rights can be
effectively enforced, by foreign right holders as well as by their own nationals.
Procedures should permit effective action against infringement of intellectual property
rights but should be fair and equitable, not unnecessarily complicated or costly, and
should not entail unreasonable time-limits or unwarranted delays. They should allow for
judicial review of final administrative decisions. There is no obligation to put in place
a judicial system distinct from that for the enforcement of laws in general, nor to give
priority to the enforcement of intellectual property rights in the allocation of resources
or staff.

The civil and
administrative procedures and remedies spelled out in the text include provisions on
evidence of proof, injunctions, damages and other remedies which would include the right
of judicial authorities to order the disposal or destruction of infringing goods. Judicial
authorities must also have the authority to order prompt and effective provisional
measures, in particular where any delay is likely to cause irreparable harm to the right
holder, or where evidence is likely to be destroyed. Further provisions relate to measures
to be taken at the border for the suspension by customs authorities of release, into
domestic circulation, of counterfeit and pirated goods. Finally, parties should provide
for criminal procedures and penalties at least in cases of wilful trademark counterfeiting
or copyright piracy on a commercial scale. Remedies should include imprisonment and fines
sufficient to act as a deterrent.

The agreement
would establish a Council for Trade-Related Aspects of Intellectual Property Rights to
monitor the operation of the agreement and governments’ compliance with it. Dispute
settlement would take place under the integrated GATT dispute-settlement procedures as
revised in the Uruguay Round.

With respect
to the implementation of the agreement, it envisages a one-year transition period for
developed countries to bring their legislation and practices into conformity. Developing
countries and countries in the process of transformation from a centrally-planned into a
market economy would have a five-year transition period, and least-developed countries 11
years. Developing countries which do not at present provide product patent protection in
an area of technology would have up to 10 years to introduce such protection. However, in
the case of pharmaceutical and agricultural chemical products, they must accept the filing
of patent applications from the beginning of the transitional period. Though the patent
need not be granted until the end of this period, the novelty of the invention is
preserved as of the date of filing the application. If authorization for the marketing of
the relevant pharmaceutical or agricultural chemical is obtained during the transitional
period, the developing country concerned must offer an exclusive marketing right for the
product for five years, or until a product patent is granted, whichever is shorter.

Subject to
certain exceptions, the general rule is that the obligations in the agreement would apply
to existing intellectual property rights as well as to new ones.

Understanding on Rules and
Procedures Governing the Settlement of Disputes

The dispute
settlement system of the GATT is generally considered to be one of the cornerstones of the
multilateral trade order. The system has already been strengthened and streamlined as a
result of reforms agreed following the Mid-Term Review Ministerial Meeting held in
Montreal in December 1988. Disputes currently being dealt with by the Council are subject
to these new rules, which include greater automaticity in decisions on the establishment,
terms of reference and composition of panels, such that these decisions are no longer
dependent upon the consent of the parties to a dispute. The Uruguay Round Understanding on
Rules and Procedures Governing the Settlement of Disputes (DSU) will further strengthen
the existing system significantly, extending the greater automaticity agreed in the
Mid-Term Review to the adoption of the panels’ and a new Appellate Body’s findings.
Moreover, the DSU will establish an integrated system permitting WTO Members to base their
claims on any of the multilateral trade agreements included in the Annexes to the
Agreement establishing the WTO. For this purpose, a Dispute Settlement Body (DSB) will
exercise the authority of the General Council and the Councils and committees of the
covered agreements.

The DSU
emphasizes the importance of consultations in securing dispute resolution, requiring a
Member to enter into consultations within 30 days of a request for consultations from
another Member. If after 60 days from the request for consultations there is no
settlement, the complaining party may request the establishment of a panel. Where
consultations are denied, the complaining party may move directly to request a panel. The
parties may voluntarily agree to follow alternative means of dispute settlement, including
good offices, conciliation, mediation and arbitration.

Where a
dispute is not settled through consultations, the DSU requires the establishment of a
panel, at the latest, at the meeting of the DSB following that at which a request is made,
unless the DSB decides by consensus against establishment. The DSU also sets out specific
rules and deadlines for deciding the terms of reference and composition of panels.
Standard terms of reference will apply unless the parties agree to special terms within 20
days of the panel’s establishment. And where the parties do not agree on the composition
of the panel within the same 20 days, this can be decided by the Director-General. Panels
normally consist of three persons of appropriate background and experience from countries
not party to the dispute. The Secretariat will maintain a list of experts satisfying the
criteria.

Panel
procedures are set out in detail in the DSU. It is envisaged that a panel will normally
complete its work within six months or, in cases of urgency, within three months. Panel
reports may be considered by the DSB for adoption 20 days after they are issued to
Members. Within 60 days of their issuance, they will be adopted, unless the DSB decides by
consensus not to adopt the report or one of the parties notifies the DSB of its intention
to appeal.

The concept
of appellate review is an important new feature of the DSU. An Appellate Body will be
established, composed of seven members, three of whom will serve on any one case. An
appeal will be limited to issues of law covered in the panel report and legal
interpretations developed by the panel. Appellate proceedings shall not exceed 60 days
from the date a party formally notifies its decision to appeal. The resulting report shall
be adopted by the DSB and unconditionally accepted by the parties within 30 days following
its issuance to Members, unless the DSB decides by consensus against its adoption.

Once the
panel report or the Appellate Body report is adopted, the party concerned will have to
notify its intentions with respect to implementation of adopted recommendations. If it is
impracticable to comply immediately, the party concerned shall be given a reasonable
period of time, the latter to be decided either by agreement of the parties and approval
by the DSB within 45 days of adoption of the report or through arbitration within 90 days
of adoption. In any event, the DSB will keep the implementation under regular surveillance
until the issue is resolved.

Further
provisions set out rules for compensation or the suspension of concessions in the event of
non-implementation. Within a specified time-frame, parties can enter into negotiations to
agree on mutually acceptable compensation. Where this has not been agreed, a party to the
dispute may request authorization of the DSB to suspend concessions or other obligations
to the other party concerned. The DSB will grant such authorization within 30 days of the
expiry of the agreed time-frame for implementation. Disagreements over the proposed level
of suspension may be referred to arbitration. In principle, concessions should be
suspended in the same sector as that in issue in the panel case. If this is not
practicable or effective, the suspension can be made in a different sector of the same
agreement. In turn, if this is not effective or practicable and if the circumstances are
serious enough, the suspension of concessions may be made under another agreement.

One of the
central provisions of the DSU reaffirms that Members shall not themselves make
determinations of violations or suspend concessions, but shall make use of the dispute
settlement rules and procedures of the DSU.

The DSU
contains a number of provisions taking into account the specific interests of the
developing and the least-developed countries. It also provides some special rules for the
resolution of disputes which do not involve a violation of obligations under a covered
agreement but where a Member believes nevertheless that benefits are being nullified or
impaired. Special decisions to be adopted by Ministers in 1994 foresee that the Montreal
Dispute Settlement Rules which would otherwise have expired at the time of the April 1994
meeting are extended until the entry into force of the WTO. Another decision foresees that
the new rules and procedures will be reviewed within four years after the entry into force
of the WTO.

Trade
Policy Review Mechanism

An agreement
confirms the Trade Policy Review Mechanism, introduced at the time of the Mid-term Review,
and encourages greater transparency in national trade policy-making. A further Ministerial
decision reforms the notification requirements and procedures generally.

This will set
out concepts and proposals with respect to achieving greater coherence in global economic
policy-making. Among other things, the text notes that greater exchange rate stability
based on more orderly underlying economic and financial conditions should contribute to
“the expansion of trade, sustainable growth and development, and the timely
correction of external imbalances”. It recognizes that while difficulties whose
origins lie outside the trade field cannot be redressed through measures taken in the
trade field alone, there are nevertheless interlinkages between the different aspects of
economic policy. Therefore, WTO is called upon to develop its cooperation with the
international organizations responsible for monetary and financial matters. In particular,
the Director-General of WTO is called upon to review, with his opposite numbers in the
World Bank and the International Monetary Fund, the implications of WTO’s future
responsibilities for its cooperation with the Bretton Woods institutions.

Government
Procurement

The Final Act
contains an agreement related to accession procedures to the Government Procurement
Agreement which is designed to facilitate the membership of developing countries. It
envisages consultations between the existing members and applicant governments. These
would be followed by the establishment of accession working parties to examine the offers
made by applicant countries (in other words, the public entities whose procurement will be
opened up to international competition) as well as the export opportunities for the
applicant country in the markets of existing signatories.

This
agreement should be distinguished from the new Agreement on Government Procurement.